January 18, 2020
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PUC staff says benefits of Maine investing in natural gas capacity unlikely to exceed costs

PORTLAND, Maine — A report issued Wednesday directs state regulators to move forward with caution when considering whether Maine electricity customers should help to pay for increasing natural gas pipeline capacity to the Northeast.

If the Maine Public Utilities Commission assessed a new fee on ratepayers to buy up to $75 million in gas pipeline capacity per year, a report from PUC staff determined “it is unlikely that the benefits to Maine consumers will exceed the costs of pipeline capacity … unless the cost of pipeline capacity is very low.”

The report comes as three pipeline companies have delivered proposals for projects they said would address New England’s shortage of natural gas.

The companies are competing, to some extent, for the limited resources of Maine’s Public Utilities Commission, which can commit to buy up to 200 million cubic feet of natural gas per day, spending up to $75 million per year to do so. State regulators could divide their commitment to that capacity among various companies.

While PUC staff questioned whether Maine ratepayers would see a benefit from expanding natural gas capacity in general, the report leaves open the possibility that any of the projects could have a worthwhile impact on reducing the cost of natural gas or electricity prices.

Because of that conclusion, the report calls for PUC staff to perform an individual cost-benefit analysis for each of the proposals it receives from pipeline companies to determine the financial impact on Maine ratepayers.

Maine is the only state in the region to consider entering such a contract after a group considering a fee on electric utility customers across all New England states was put on hold. Massachusetts Gov. Deval Patrick withdrew from that process, calling for further study of Massachusetts’ energy needs before considering a tariff committed natural gas capacity.

Those commitments are required for any pipeline company to submit an application to the Federal Energy Regulatory Commission.

The report Wednesday moves the three-person commission closer to consideration of a new fee on Maine ratepayers allocated to natural gas delivery expansion to the state. It calls for the PUC to set a deadline for accepting proposals from pipeline companies and then for deciding whether to pursue further investigation of one or more of the proposals.

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